High global oil prices and a US economy that didn't collapse into Depression in 2008 have combined to create record oil drilling in the America. Baker Hughes, the gas and oil service company, tracks drilling rigs and reports that 1069 on-shore rigs are now drilling for oil, a record number since it began its index in 1987.
The number of oil drilling rigs was about 250 in 2001 and again in 2009 when oil hit $30 in December 2008 as the world hurtled toward depression. A four-fold increase in oil drilling is remarkable and reflects both the record number of drilling rigs now operating and the near collapse of the US oil drilling industry in 2001 and 2009.
The massive amount of oil drilling that now includes shale oil deposits has been instrumental in increasing domestic, US oil production and reversing a decades-long decline. As noted in the Wall Street Journal, 3.9 million barrels per day of oil are produced from on-shore American wells, rising 5.9% from last year's improving production, and the most in a decade.
The US oil fields are not any longer in decline. That is big news. How long the increased production continues and how much higher it goes are equally big questions for the future.
John: I am not sure if you stuck around for the Bentek presenation at GasMart (session right after your panel), but they had some great information on this, and economics. In particular, slide 5 of this presentation - http://gasmart.com/gasmart2011/resources/pdf/simpson.pdf - makes it clear why plays such as the Bakken Shale are so hot - the economics simply cannot be ignored when you could give away the gas based on the revenue from oils and natural gas liquids.
ReplyDeleteThank you. As you say, "the economics simply cannot be ignored."
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